The directors present the strategic report for the year ended 31 December 2025.
This Strategic Report provides our shareholders with a comprehensive overview of LeoVegas UK Ltd's ("LVUK") performance and strategic direction for the financial year ending 31 December 2025. This report is designed to be fair, balanced, and understandable, consistent with other information in the annual report. It focuses on material information relevant to LVUK's development, performance, position, and principal risks, while ensuring consistency and a forward-looking orientation.
LVUK, formerly known as ROCKET X LV Ltd, is a UK-domiciled entity integral to the broader LeoVegas Group. It primarily provides operational and marketing services to affiliated companies:
LeoVegas Gaming Plc ("LVG") in Malta (the Group's operational headquarters), and Gametech Marketing Ltd ("Gametech") in Gibraltar.
Additionally, LVUK undertakes software development operations, supplying these services to the Group’s technical hub, Sweden-domiciled Gears of Leo AB ("Gears").
The overarching vision and purpose of the LeoVegas Group is to "Create the world’s greatest iGaming experience," offering casino, live casino, and sports betting. Operations are primarily based in Malta, supported by tech hubs in Sweden, Poland, and Spain. LeoVegas AB (publ) de-listed all shares from Nasdaq Stockholm on 22 September 2022 and is now a wholly-owned subsidiary of MGM Casino Next Lion, LLC, an indirect subsidiary of MGM Resorts International ("MGM").
The Group aims for strong, sustainable growth, guided by four strategic cornerstones:
● Innovation: Driving product and technological advancements.
● Data Driven: Utilising insights to inform decisions and strategies.
● Responsible: Prioritising player protection and ethical conduct.
● Scalable: Building adaptable solutions for global expansion.
The Group's ambition extends beyond growth in existing markets to include strategic expansion into new regulated markets, particularly those exhibiting high mobile penetration and digitalisation. LeoVegas employs a multibrand strategy, managing numerous brands such as LeoVegas, Bet MGM, and Expekt, alongside several local brands in the UK, to attract diverse customer segments. The Board of Directors and Management are committed to driving growth and achieving performance beyond the industry average.
The Board of Directors of LVUK continuously reviews and assesses potential risks and uncertainties through a structured risk management framework. Regular deliberations, involving management and specialist advisors, focus on identifying, monitoring, and mitigating the most significant threats to the company's future success, covering commercial, operational, and financial matters. This proactive approach ensures that our strategies remain robust against an evolving external landscape, particularly given LVUK's integral service provision role within the broader LeoVegas Group.
As a key service provider within the LeoVegas Group, LVUK's principal risks are intrinsically linked to the Group's overall operating environment and strategic decisions. These risks, which are regularly monitored and discussed by management, include:
Changes in Legal and Regulatory Environment: The primary risk for the LeoVegas Group, and consequently for LVUK's service demand and operational parameters, is the dynamic legal and regulatory environment in which the Group operates. These changes could include new legislation or modifications to national rules concerning wager levels, marketing, or taxes. Such changes have the potential to significantly impact the Group's business activities and expansion opportunities, thereby affecting the volume and nature of services required from LVUK.
Dependency on Maintaining Licenses: The Group's ability to operate in various markets is critically dependent on maintaining its existing gaming licenses. Although LVUK itself does not hold external gaming licenses, a revocation of a license from an affiliated company (like LVG) would negatively affect the Group's earnings and financial position, directly impacting the demand for LVUK's operational, marketing, and software development services.
Uncertainty in Unregulated or Emerging Markets: While the Group strategically pursues growth in regulated markets, some territories where it operates or intends to operate have unclear or evolving gambling laws. Future developments and their consequences for the online gaming market in these regions are uncertain and could affect the Group's revenue, earnings, and expansion opportunities, indirectly influencing LVUK's development support and service requirements.
Tax Complexity: As a company operating in numerous jurisdictions, the LeoVegas Group is subject to complex and evolving tax regulations. The increased complexity in determining the basis for taxation presents a continuous risk which directly impacts LVUK given its material intra-group transactions and the recent change in its transfer pricing policy.
LVUK and the broader LeoVegas Group actively manage these principal risks through several strategic initiatives:
● Proactive Regulatory Monitoring: The Group closely monitors regulatory developments in Europe and elsewhere. This allows LVUK to adapt its operational and software development services to anticipated changes.
● Strategic Licensing and Compliance: The Group prioritises the application for and maintenance of licenses in regulated markets, viewing them as crucial for mitigating risk due to greater predictability and opportunities for targeted marketing. LVUK supports these efforts by ensuring its services meet the necessary compliance standards.
● Expert Tax and Legal Advice: Due to the increased complexity in tax matters across numerous jurisdictions, the Group engages legal and tax advice where appropriate. This is particularly relevant for LVUK following its recent transfer pricing policy change, where expert advice ensures compliance and mitigates the risk of adverse tax assessments.
● Industry Engagement: The Group actively works to share experiences from other regulated markets to contribute to a sound and sustainable gaming market with high consumer protection. This collaborative approach helps to shape future regulatory environments and fosters a more predictable operating landscape for all Group entities, including LVUK.
FY25 was a pivotal year for LVUK, marked by a significant strategic shift in its financial structure. Historically, LVUK operated under a routine cost-plus service transfer pricing policy, which consistently generated taxable profits. However, in FY25, the company transitioned to a new profit/loss split model with its affiliated counterparties, LVG and Gametech. This fundamental change directly impacted LVUK's financial performance, resulting in a significant loss for the financial year ended 31 December 2025. This reported loss reflects a re-alignment of internal group economics and the allocation of profits and risks within the Group's value chain. Despite this financial shift, LVUK continued its integral role within the LeoVegas Group, providing essential operational and marketing services to LVG and Gametech, and undertaking critical software development for the Group’s technical hub, Gears of Leo AB. LVUK's development in FY25 is therefore best understood within the context of this strategic intra-group restructuring.
This internal business restructuring directly altered LVUK's profitability and necessitates a thorough review to ensure the appropriateness of the new policy against the functions performed, assets used, and risks controlled/assumed across LVUK and its counterparties. The tax treatment and any potential exit charges related to this transition from FY24 to FY25 are critical considerations.
Externally, the evolving regulatory landscape within the online gaming industry, particularly in Europe, indirectly affects the demand for LVUK's services from other Group entities. The increasing complexity in tax matters across numerous jurisdictions also influences the framework within which LVUK operates, as evidenced by the Group's continuous monitoring of regulatory developments and engagement of legal and tax advice where appropriate.
Looking ahead, LVUK's long-term financial performance and strategic positioning will be directly influenced by the continued appropriateness and successful implementation of the new profit/loss split transfer pricing model. The Group's overall strategy to grow in regulated markets will also define the scope and nature of services required from LVUK in future periods.
Looking ahead, LVUK will continue its integral role in supporting the broader LeoVegas Group's vision to "Create the world's greatest iGaming experience." The Group's strategic direction of sustainable growth, driven by innovation, data-driven approaches, responsibility, and scalability, will directly shape LVUK's future activities. LVUK is expected to continue providing essential operational, marketing, and software development services to its affiliated companies, adapting to the evolving needs of the Group as it pursues expansion into new regulated markets.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2025.
The results for the year are set out on page 10.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The company manages its cash and borrowing requirements in order to maximise interest income and minimise interest expense, whilst ensuring the company has sufficient liquid resources to meet the operating needs of the business.
Investments of cash surpluses, borrowings and derivative instruments are made through banks and companies which must fulfil credit rating criteria approved by the Board.
All customers who wish to trade on credit terms are subject to credit verification procedures. Trade debtors are monitored on an ongoing basis and provision is made for doubtful debts where necessary.
The directors are confident about the future developments of the company and these are detailed within the strategic report.
In accordance with the company's articles, a resolution proposing that Azets Audit Services be reappointed as auditor of the company will be put at a General Meeting.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of LeoVegas UK Limited (the 'company') for the year ended 31 December 2025 which comprise the income statement, the statement of comprehensive income, the statement of financial position, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above and on the Financial Reporting Council’s website, to detect material misstatements in respect of irregularities, including fraud.
We obtain and update our understanding of the entity, its activities, its control environment, and likely future developments, including in relation to the legal and regulatory framework applicable and how the entity is complying with that framework. Based on this understanding, we identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. This includes consideration of the risk of acts by the entity that were contrary to applicable laws and regulations, including fraud.
We identified the following applicable laws and regulations as those most likely to have a material impact on the financial statements: Health and Safety; employment law (including the Working Time Directive); and compliance with the UK Companies Act.
In response to the risk of irregularities and non-compliance with laws and regulations, including fraud, we designed procedures which included:
Enquiry of management and those charged with governance around actual and potential litigation and claims as well as actual, suspected and alleged fraud;
Assessing the extent of compliance with the laws and regulations considered to have a direct material effect on the financial statements or the operations of the company through enquiry and inspection;
Reviewing financial statement disclosures and testing to supporting documentation to assess compliance with applicable laws and regulations;
Performing audit work over the risk of management bias and override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for indicators of potential bias.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
The income statement has been prepared on the basis that all operations are continuing operations.
The company is a private company limited by share capital, incorporated in England and Wales.
The address of its registered office is Ground Floor, Bevan House, Sir Bobby Robson Way, Newcastle upon Tyne, NE13 9BA.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The financial statements of the company are consolidated in the financial statements of LeoVegas International Limited. These consolidated financial statements are available from its registered office, Level 7, The Plaza Business Centre, Bisazza Street. The ultimate parent is MGM Resorts International.
The company meets its day to day working capital requirements through cash generated from operations and related party borrowings. The company did not have any external borrowings and limited external financial commitments. The company is party to a group contract in place which is not due to expire due to being on a rolling basis.
The company’s forecasts and projections for the next twelve months show that the company should be able to continue in operational existence for that period, taking into account reasonable possible changes in trading performance. In the director’s assessment of reasonably possible changes in trading performance for the next twelve months they have considered a fall in demand should the global economic impact widen.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is credited or charged to profit or loss.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.
Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.
The company participates in a share-based payment arrangement granted to its employees and employees of its subsidiaries. The company has elected to recognise and measure its share-based payment expense on the basis of a reasonable allocation of the expense for the group recognised in its consolidated accounts. The directors consider the number of unvested options granted to the company’s employees compared to the total unvested options granted under the group plan to be a reasonable basis for allocating the expense.
The expense in relation to options over the company’s shares granted to employees of a subsidiary is recognised by the company as a capital contribution, and presented as an increase in the company’s investment in that subsidiary.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
The LeoVegas group operates management incentive plans in which some employees of LeoVegas UK Limited are included. Due to the complexity of the valuation, the underlying assumptions and the long term nature of these plans, such estimates are subject to significant uncertainty. Management engage independent, qualified professionals to assist in this process and in turn assess the appropriateness of key assumptions. The year end liability relating to these schemes is £109,624 (2024: £281,393).
The average monthly number of persons (including directors) employed by the company during the year was:
Their aggregate remuneration comprised:
The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 5 (2024 - 2).
The number of directors who are entitled to receive shares under long term incentive schemes during the year was 2 (2024 - 0).
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
The deferred tax asset set out above is not expected to reverse within 12 months and relates to the utilisation of tax losses against future expected profits of future periods.
The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.
Contributions totalling £368,000 (2024: £158,357) were outstanding at the year end and included within creditors.
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
The operating leases represent leases to third parties. The leases are negotiated over terms of 2-6 years and rentals are fixed for 2-6 years. There are no options in place for either party to extend the lease terms.